Kemp Inc., a calendar year taxpayer, generated over $10 million taxable income in 2018. Kemp made one asset purchase: used manufacturing equipment costing $1,543,600. The equipment has a 7-year recovery period and was placed in service on June 14. Assuming that Kemp made the Section 179 election with respect to the equipment, compute Kemp's 2018 cost recovery deduction.
A) $1,543,600
B) $1,077,680
C) $1,000,000
D) None of the above

Question

Kemp Inc., a calendar year taxpayer, generated over $10 million taxable income in 2018. Kemp made one asset purchase: used manufacturing equipment costing $1,543,600. The equipment has a 7-year recovery period and was placed in service on June 14. Assuming that Kemp made the Section 179 election with respect to the equipment, compute Kemp's 2018 cost recovery deduction. 
A) $1,543,600
B) $1,077,680
C) $1,000,000
D) None of the above

Quizplus · Accepted Answer

$1,000,000 Section 179 expense deduction + $543,600 100% bonus depreciation.

Kemp Inc, a Calendar Year Taxpayer, Generated Over $10 Million Taxable